02-17-2026
When business leaders think about competitive intelligence, they often picture market research, customer analytics or benchmarking. Yet one of the most powerful and least visible forms of competition happens at the product level: reverse engineering.
A recent research paper by the Daniels School’s Jun Oh with coauthor Travis Dyer from Brigham Young University sheds light on how firms systematically analyze and deconstruct rivals’ products and how this practice has real consequences for innovation, secrecy and financial performance.
Reverse engineering refers to the process of taking apart a competitor’s product to understand how it works, what technologies it uses and how it achieves performance or cost advantages. This might involve physical disassembly, software de-compilation or technical testing and benchmarking.
The research shows that firms engage in reverse engineering far more systematically than is commonly assumed. Importantly, this activity is often invisible in traditional data sources because it happens inside R&D labs, engineering teams and product development units. Yet its impact is significant: firms use insights from reverse engineering to accelerate their own innovation, identify design improvements and close technological gaps with competitors.
In other words, reverse engineering is not just about copying — it is a learning mechanism. It allows firms to access knowledge that is otherwise difficult to obtain and to translate competitors’ breakthroughs into their own innovation pipelines.
Conventional wisdom suggests that trade secrecy — keeping designs, processes and know-how confidential — should deter imitation. The study finds the opposite. Firms that rely more heavily on trade secrecy actually trigger more intense reverse engineering efforts by rivals.
Why? Secrecy creates information scarcity. When firms cannot learn through open channels such as publications, patents or partnerships, they turn to the product itself as the primary source of knowledge. The sealed “black box” becomes a puzzle that competitors are motivated to solve.
This creates a strategic paradox. By doubling down on secrecy, firms may inadvertently increase the incentives for rivals to dissect and analyze their products. Rather than preventing imitation, secrecy shifts the mode of learning from formal channels to technical investigation.
The study also finds that not all firms face the same level of reverse engineering risk. The authors highlight several contextual factors that amplify the response, including intense competition, limited alternative learning channels and critical stages of the product life cycle.
This means the cost of secrecy is not uniform. In fast-moving, competitive industries with restricted labor mobility and high technological uncertainty, secrecy may be especially expensive because it provokes aggressive imitation efforts.
Perhaps the most striking finding is that reverse engineering is not just a technical or strategic issue; it also has measurable economic effects. Firms that are exposed to higher levels of reverse engineering experience meaningful financial pressure, including declines in profit margins.
This suggests that reverse engineering enables competitors to erode differentiation, replicate performance features and compete more effectively on price or quality. Over time, this translates into real competitive losses for the original innovator.
From a managerial perspective, reverse engineering should be viewed as a material strategic risk, not a background nuisance. It affects revenue, margins and long-term competitive positioning.
The study offers several practical lessons for executives, innovation leaders and strategy teams:
The paper reframes reverse engineering as a central yet underappreciated force in modern competition. It shows that secrecy does not eliminate imitation — it reshapes how learning happens. And it demonstrates that reverse engineering has real financial consequences, putting pressure on margins and eroding competitive advantage.
For business leaders, protecting innovation is not just about hiding knowledge. It is about designing strategies that anticipate how competitors learn, how products can be decoded and how firms can stay ahead in a world where every successful product is also a potential lesson for rivals.
